Monday, March 19, 2007

Silver and Gold are Working Through Resistance

SILVER & GOLD PRICES might have given us more encouragement today, but didn't. Silver rose 2 cents and gold 50 cents. In the swampy, muddy resistance they are working through, that almost amounts to a loss. Both metals may have to retreat once more to make another charge at 1330 and 653 - 657. On the downside, that retreat will be fine so long as it holds 1240 and 636.

A declining market shows us the progress of hope's death. Morale reaches a low, then some encouraging sign appears on the horizon. Hope revives, taking prices with it. But hope soon runs out of steam, and gives up again. On a chart this traces out a pattern of lower lows & lower highs.

And that pretty well explains what the Dow is doing right now. Hope revives for four or five days, labours higher, then collapses & gives up all that gain in a day. Today the Dow rose 115.76, making up about half its loss for last week. Chances are it will fiddle here a day or so, then head lower again. On the other hand, last week's trading might have put in a double bottom around 12,050 and it might rally further from here. Still possible in the next 3 months or so is a rally to the old high before the decline begins in earnest. Either way, stocks' days are numbered.

The DOW IN GOLD DOLLARS at G$386.98 (18.72 oz) remains below strong resistance at G$390, but hasn't fallen off yet either. Nonetheless, I would still trade stocks for silver and gold now. [Y'all have written to ask how I figure the Dow in Gold Dollars. Multiply the gold price by 0.048375. That is the cost of one gold dollar in paper dollars. Then divide that into the Dow, and the resulting figure is the Dow in Gold Dollars. To convert gold dollars to ounces, multiply gold dollars by 0.048365, or divide by 20.6718. I use gold dollars so that can look back on the Dow to 1896 with one unchanging standard.]

Talking to a banker last weekend I felt like I'd been slugged in the stomach with a giant lug wrench. I knew that credit guidelines were very loose, witness the subprime mortgage market. But these lunatic loans are not subprime, they are subhuman. Oh, if the debt once starts collapsing in on itself, what will be the end thereof? All of us -- innocent & guilty alike -- will pay for 83 years of lies in a few minutes of truth.

Argentum et aurum comparenda sunt --
-- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

"Buy Silver and Gold Coins at the Best Prices"

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $1,250.00; silver's primary is up targeting 16:1 gold/silver ratio or $78.13; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.